NEW YORK (CNNMoney) -- World markets were weak on Wednesday, backing off from the prior session's rally as member nations of the European Union haggled over expanding the bailout fund for Greece.
"The noises out of Europe suggest that bank recapitalization and an enhanced [European Financial Stability Facility] is on the table," wrote Marc Chandler, analyst for Brown Brothers Harriman. "But the finer details are yet to be agreed [on] and rhetoric in the last session or two highlights the difficult political process in getting all 17 euro members to agree to one plan."
European markets were lower at the close. London's FTSE 100 () fell 1.4%, while the CAC 40 ( ) in Paris and the DAX ( ) in Frankfurt dropped by less than 1%. The Hang Seng ( ) in Hong Kong closed down 0.7% while Tokyo's Nikkei ( ) rose 0.7% at the close.
The Finnish Parliament approved the package on Wednesday, but that still leaves the Germans, who form the economic backbone of Europe.
"After Finland, seven other [euro zone] parliaments will still have to ratify the changes to the EFSF, including Germany tomorrow," wrote Chandler.
The outcome is uncertain, as the Germans are growing weary of their role propping up their weaker neighbors.
"The perception is that the Germans are playing hardball on this and they want the Greek bondholders to take a bigger haircut," said Nick Stamenkovic, fixed income strategist at RIA Capital Markets Ltd. in Edinburgh, Scotland.
This follows an impressive rally on Wednesday, when the FTSE 100 and the Hang Seng jumped 4%, the DAX and the CAC 40 rose more than 5% and the Nikkei climbed nearly 3%.
The rally was fueled by the perception that European leaders were starting to realize the importance of rescuing Greece from its fiscal troubles. However, this sentiment has been tempered by the realization that coming up with a solution is fraught with disagreement.
"I think the markets have rallied on hope rather than reality," said Stamenkovic. "The market is very concerned that the funding for Greece may not come at a good time for them," referring to the October default deadline.
Bank stocks in France were lower on Wednesday. Credit Agricole slipped by about 1%, while Societe Generale fell more than 3%.
U.S. bank stocks were mixed. Wells Fargo (Fortune 500) and Citibank ( , Fortune 500) and JPMorgan Chase ( , Fortune 500) made modest gains, but Goldman Sachs ( , Fortune 500) and Bank of America ( , Fortune 500) dropped.,
Martin Harvey, an analyst for Threadneedle in London, said the German Bundestag is likely to vote for the expanded EFSF on Thursday and Greece is likely to get its next round of bailout funding by mid-October.
"However, there is growing acknowledgement that given the size of Greece's debt burden, (now forecast to rise to 189% of GDP next year) larger haircuts will need to be enforced eventually," wrote Harvey to CNNMoney.
|What we want Apple to unveil at WWDC|
|Millennials squeezed out of buying a home|
|7 traits the rich have in common|
|Big Data knows you're sick, tired and depressed|
|Your car is a giant computer - and it can be hacked|
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||3.78%||3.79%|
|15 yr fixed||2.98%||2.93%|
|30 yr refi||3.85%||3.85%|
|15 yr refi||3.05%||3.00%|
Today's featured rates: